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An indemnity agreement provides protection against loss, commonly used in high-risk activities like skydiving and bungee jumping to shield businesses from liability. In the context of surety, it is a document between a principal and a surety, stating that the principal will indemnify the surety if a claim arises. Indemnification involves restoring the surety to its original position; for instance, if a surety pays $20,000 on a claim, the principal must reimburse that amount. Typically, business owners are required to sign indemnity agreements, though sometimes only the best applicants need to do so, and additional requirements like spousal indemnity or third-party witness signatures may apply.
